New York Markets After Hours

Apple shares gain back some buzz

Stock bounces back from three-day drop; T-Mobile deal announced

By

DanGallagher

SAN FRANCISCO (MarketWatch) — Apple Inc. saw its shares gain back some lost ground Thursday following a harsh sell-off for the first half of the week — though the shares remain near their cheapest valuation level in the last decade.

Reuters

Apple CEO Tim Cook, shown here at the D10 Conference on May 29, says the company is planning to build some of its Mac computers in the U.S. next year.

By the afternoon, Apple
AAPL, -1.54%
picked up about 2% to trade at $549.57. The stock has been under two days of intense selling pressure and remains about 8% below its level at the start of the week.

The sell-off was not driven by any apparent news, though a variety of factors appeared to factor in, including technical drivers, concern over the health of the consumer technology market and growing competition in the tablet market. Read: Five downside catalysts for Apple.

Thursday’s bounce-back came after the parent company of T-Mobile USA — the only major U.S. carrier not selling the iPhone — said it struck a deal to begin selling Apple products next year.

“We have now added the final piece to the jigsaw to boost the competitiveness of T-Mobile USA sustainably,” Deustche Telekom Chairman Rene Obermann said in an interview with the Wall Street Journal. Read WSJ: T-Mobile USA to carry iPhone

Also, Apple CEO Tim Cook granted a rare round of interviews with Bloomberg Businessweek and CNBC. Many of the things said in those interviews were similar to past statements made by the CEO, though he conceded to Businessweek that the company “screwed up” with the launch of its mapping application on the iPhone 5. Read: Apple CEO says 'we screwed up' on maps

He also said Apple is planning to build some of its Mac computers in the U.S. Most of Apple’s products are produced in China.

“We’ve been working on this for a long time, and we were getting closer to it,” Cook told Businessweek, adding that the company is investing over $100 million in the effort, but gave no details about where. “It will happen in 2013.”

Still, Apple’s shares have taken a heavy pounding in recent weeks, down nearly 22% from their peak above the $700 mark on the day the iPhone 5 launched on Sept. 21. The stock is down nearly 14% since the company unveiled its latest round of product refreshments on Oct. 23 that included the iPad mini and a re-designed iMac.

The sell-off has put the stock to about 11 times estimated earnings for the next four quarters — more than 60% the stock’s average multiple over the last 10 years, according to FactSet.

Mac production coming to U.S.

(2:48)

Apple CEO Time Cook said the company will produce one of its existing lines of Mac computers in the U.S. next year. George Stahl has details on Markets Hub. Photo: AP.

Brian Marshall of ISI Research told clients in a note late Wednesday that they should “stay the course on Apple,” which he rates as a buy, though he also added the famous Mike Tyson quote that “Everyone has a plan, ‘till they get punched in the mouth.”

Marshall recommends that investors look “holistically” at the company, saying that “1) availability [of products] is improving, and 2) Apple products remain the “gift of choice” this holiday season.” He has a $710 price target on the shares.

In a note Thursday morning, Brian White of Topeka Capital noted that Apple’s shares have undergone four sell-offs of 15% or more over the past 13 months.

“Given our view that the fundamental story around Apple remains strongly intact, we believe this latest decline is setting up another attractive buying opportunity and once the tax-related selling abates, the stock will move sharply higher,” White wrote, maintaining a Street-high $1,100 price target on the shares.

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